It has been 1,194 days since the world’s biggest advertiser issued a rallying cry that demanded a new dawn of media transparency.
Procter & Gamble’s chief marketing officer, Marc Pritchard, forcefully warned in January 2017 that we have "an antiquated media buying and selling system that was clearly not built for this technology revolution. We serve ads to consumers through a non-transparent media supply chain with spotty compliance to common standards, unreliable measurement hidden rebates and new inventions like bot and methbot fraud."
Now, in a global first-of-its-kind analysis, the UK’s advertiser trade body ISBA and accounting giant PwC have shown just how far off our industry remains in delivering that transparent and accountable future.
The stats in their report are shocking and worth repeating:
- 51% of the money that advertisers buy programmatically goes to the publishers on whose sites the ads are sold. Of that remaining 49%, nearly a third of this money simply can’t be accounted for.
- It is only possible to properly account for 12% of ad impressions, based on the lack of data that is available from both the demand-side and supply-side platforms used in the programmatic buying ecosystem.
Just imagine running a clothes shop in which you took only half the money from each sale? Or you are able to produce receipts for just 12% of clothes sold that were definitely in your stock room?
Now imagine your business is worth £2bn – the level the open-market programmatic ad-buying industry (not including walled gardens such as Facebook) has now reached in the UK.
The whole point of digital media is that, by creating new ways to target people across the internet, it could deliver advertising that could reach the right customers more frequently and measure how well media performed. By this standard, programmatic has failed.
The companies that took part in the study had more than enough time to provide PwC with the information needed – nearly two-and-a-half years in total – and still there are huge discrepancies.
To make matters worse, this study looked at the premium end of the programmatic market, involving some of the UK’s leading publishers, media agencies and best-known adtech companies.
As the lead author of the report, PwC’s Sam Tomlinson, told me, the true proportion of missing revenue – which the report intriguing labels as the "unknown delta" – is likely much higher.
This is a disgraceful and unsustainable situation in which hundreds of millions of pounds are being either wasted or misappropriated. And it’s a collective failure by the advertising industry that has brought us to this point.
A failure by marketers and their media agencies to demand more transparency. A failure by adtech vendors to provide more transparency. A failure by publishers to look beyond a growing online revenue stream amid the long-term decline in print. A failure by people like me to write about this important issue more often.
As one commercial chief for a major UK media owner told me privately: "Unfortunately, advertisers just aren’t close enough to it. It’s almost like they’ve been asleep at the wheel. Meanwhile, agencies have spent the last few years trying to make money in a difficult market and programmatic has been the golden goose."
This ISBA report comes at a crucial time for the industry, which is in the middle of dealing with a coronavirus pandemic that appears to be accelerating long-term trends: online media consumption is growing even more quickly and tech giants Google, Facebook and Amazon are well-positioned to increase market share even more quickly, as I wrote last week.
Programmatic is now no longer just a buying mechanism for websites and apps – brands are increasingly able to buy targeted, automated ads on out-of-home and connected TV. This market is now too big to be taken as unseriously as it has been.
This is important for the future of journalism too. There has been much outcry in the past few weeks over brands blocking coronavirus keywords, meaning important stories about the biggest issues of the day are not being rewarded by online advertising. But this report also shows that only 19% of ad impressions – again, at the premium end of the programmatic market – are going on premium media publishers’ websites. Why are brands allowing more than four-fifths of their online ads to go on "the long tail" of media?
If this mess is not cleaned up soon, marketers may just decide to put more money into the walled gardens of Facebook and Instagram. If we can’t trust the open web, why not just reach online audiences though Facebook’s Audience Network, where inventory is often cheaper and not riddled with the same issues as programmatic?
Or, as Jellyfish digital strategy director Gawain Owen provocatively wrote on LinkedIn last night, a brand’s chief executive might be tempted to ask the chief financial officer to take over media management. He said: "Could you imagine Tesco’s not being aware how much farmers are paid and how the milk got from the farm to the shop? Imagine a world where finance took over commercials? They would scrutinise every penny like they do your expense claim to find the missing 15%."
Either outcome would be a sorely missed opportunity, because a healthy programmatic media system is good for brands, media owners and consumers (provided their privacy can be safeguarded). Cleaning up this mess is a prize worth fighting for.
Look at British Gas and MediaCom's recent "Winter is coming" programmatic campaign, which won at last year's Campaign Tech Awards. They took an obvious insight – cold weather leads to more demand for home heating – but used programmatic tech in paid search buying to help it match supply with demand much more effectively. So much so that sales increased by 45% year on year.
BT, one of the 15 brands that took part in the ISBA study, insists that digital display is an effective sales driver for the company, despite there being a "big hole in the value chain", as its head of media Graeme Adams said.
Pritchard was right back in 2017 and he’s still right today. And the words he spoke more than 1,000 days ago should be heeded again:
"Don’t be fooled by the myths. Don’t accept the excuses. Don’t wait for someone else to move. Don’t be daunted by the task. Take one step at a time. There is tremendous power in the collective force of our industry. Let’s make the commitment now to come together and use that force for growth and for good."
Omar Oakes is global tech editor at Campaign